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In response to mounting concerns over the financial strain faced by American banks managing cryptocurrency assets for clients, members of Congress are leading bipartisan efforts to advocate for revisions to current accounting standards.
This call for reform has garnered significant support from various industry groups, signaling a growing consensus on the need for change.
Industry Consortium Petitions SEC for Regulatory Amendments
A consortium comprising influential industry organizations, including the American Bankers Association and the Securities Industry and Financial Markets Association, has taken a proactive stance by formally petitioning the Securities and Exchange Commission (SEC) to reassess existing accounting regulations.
The consortium's plea was articulated in a detailed letter to the SEC, highlighting specific modifications sought by the industry to address pressing challenges.
Proposals Seek to Ease Reporting Burden on Banks
At the heart of the debate lies the requirement for public entities, particularly banks, to classify cryptocurrencies held in custody as liabilities. This obligation necessitates the allocation of equivalent assets to mitigate potential losses and fulfill capital requirements, imposing significant financial obligations on these institutions.
In an effort to alleviate this burden, the industry coalition has put forth several proposals aimed at streamlining reporting processes for banks managing crypto assets.
One of the primary recommendations is the exclusion of certain assets from the broad definition of cryptocurrencies. Specifically, assets such as tokenized deposits and tokens associated with SEC-approved products, like spot Bitcoin ETFs, would be exempted from the stringent reporting requirements.
Banking and Crypto Regulation
Furthermore, the coalition advocates for regulated banks to be relieved of the obligation to list crypto holdings as liabilities on their balance sheets. Instead, while still ensuring transparency and accountability, these institutions would be required to disclose cryptocurrency-related activities in their financial reports, thereby easing the reporting burden without compromising regulatory oversight.
According to Crypto News, the bipartisan push for reform underscores the growing recognition of the challenges posed by current accounting standards in the context of crypto asset management.
According to News BTC, with support from both Congress members and industry stakeholders, the momentum for regulatory amendments continues to build, signaling potential changes on the horizon.
These proposed changes aim to strike a balance between regulatory compliance and operational efficiency, ultimately fostering a more conducive environment for banks navigating the complexities of cryptocurrency management.
Photo: Andy Feliciotti / Unsplash
